Everyone knows that college is an important step in the life of any person. It is one of the main goals, the accomplishment of which offers high hopes for a successful future.
However, it is not a big surprise that higher education comes at a considerable cost, with tuition fees getting higher each year.
Forward-looking parents who want to ensure future prosperity for their children usually start saving for college as soon as their babies have managed to make the first step.
Even more prudent parents are sure to have a definite plan of making savings for their offspring’s studies. Even if you haven’t started yet, and your child is about to mail out application letters, it is never too late.
Nevertheless, a good plan is always a beneficial strategy, especially in financial endeavours. Here are some tips on how to save money for college.
Set a Definite Goal
That is the place to start from. To plan something, you need to know what exactly you are planning for. Assess your needs and define what sum is required for them. Answer some questions:
- For how many children are you going to pay?
- How much time is left before they go to college?
- For how many years will they study?
- Are you going to fund all this period or only half?
- What college do you have in mind? Public, private, or community? In- or out-of-state?
- What are the projected expenses for accommodation and transportation?
Of course, some of these questions may have no definite answer so far. Thus, it would be prudent to have several possible scenarios. But in any case, at least approximate calculations can help to see the final picture and define the further plan. Conduct some research based on your goals derived from the answers and make use of online financial calculators to help you with estimates and budgeting.
Define the Way of Saving
When the definite goal is set and you know what sum (at least approximate) you’ll need to cover, you have to decide on the saving and investment vehicle that will help you achieve your objectives. There are a number of options, some of which offer rather attractive tax-saving benefits.
As some of the examples, you may use section 529 plans, Coverdell Education Savings Accounts (ESAs), Individual Development Accounts (IDAs), or taxable mutual fund or brokerage accounts. Each of them comes with its pros and cons, of course. Make some online research to learn more about each available option to decide which one is the most beneficial for you.
Start Saving
Of course, it is more than obvious that the earlier you start saving, the more money you will get at the end. But even if you started a bit late, you still have good chances with an advantageous plan. Just remember to keep discipline in setting aside some amount regularly.
Make it a part of your monthly household budget like utility bills or sign up for automated regular contributions to the savings account if needed. By the way, some savings plans may be open for other parties, so do not hesitate to involve other relatives or friends who want to contribute.
Consider cutting on your daily expenses. Analyze your family budget and think about where you could save more without creating a considerable strain on your everyday lives. Make use of all the possible bonuses, loyalty programs, and wage rises. Every penny matters for your precious child and their prospects in life.
Consider Financial Aid
Undoubtedly any assistance from outside will be useful, so consider all the possible options.
Scholarships and grants take the first position on the list. If your children do not qualify for need-based ones, pin your hopes on merit-based awards. Encourage your kids to strive for higher achievements in studies and extra-curricular activities and help them succeed at every step they take. Explain to them that this is a good helper in planning for their future, but do not get overly demanding though. Psychological traumas will not pave their way into college.
Student loans are another way of financial aid that you as a parent may get for your children’s college education. Start with filling out the Free Application for Federal Student Aid (FAFSA) at the Department of Education, which will consider if and how much federal aid you may qualify for.
If you have no other way out but for borrowing, try all the possible federal loan options in the first place. Banks and credit unions offer private student loans but usually with much higher rates. In any case, you should research and study this issue thoroughly and carefully before signing any deals, assessing the sum you can afford to borrow, and examining all the possible repayment options.
One more viable option to help you save for your children’s college is engaging them in the endeavour and encouraging them to get a part-time job. While still in high school and after having been admitted to a college, your kid can perform a myriad of jobs. They can work in a local library, store, or cafeteria, write Pro-papers for their peers, deliver mail or pizza, or even get employed as a junior assistant in your company.
In addition to helping you bridge the financial gap, such a move will teach them independence and responsibility from a young age. They should understand that investing in their future and relieving their parents from the burden at least partially is very honourable.
Bottom Line
Of course, college for your children demands a lot from the parents. It is not a surprise for anyone that ensuring your kids’ bright future is a costly pursuit. However, a security plan and your firm resolve can help you remove mountains. Plan and start saving as early as possible to get more opportunities for yourself and your children.
Modupe Gbadeyanka